To Be a Natural Monopoly, a Firm Must

question 11

Multiple Choice

To be a natural monopoly, a firm must

• A)control a key resource input.
• B)have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms.
• C)have significant network externalities.
• D)be in a government-regulated market.

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Definitions:

Square Feet

A unit of area measurement equivalent to a square measuring one foot on each side, commonly used in measuring real estate and building spaces.

Indirect Expenses

Costs that are not directly attributable to a specific product or service but are necessary for the overall operation of a business, such as utilities, rent, and administrative salaries.

Gross Sales

Gross sales represent the total sales revenue of a company, without deducting any sales returns, allowances, or discounts.

Direct Expense

Expenses that can be directly tied to the production or sale of specific goods or services.